May 2024

Agile methodology and microservices power B3’s next-gen CSD system 

An Inside Look at B3’s New Cutting-Edge CSD System

B3 is breaking new ground with the build-up of its elastically scalable and microservice-based CSD-system built upon Vermiculus’ CSD solution VeriSafe™. This revolutionary project started in early 2023 and has recently completed its initial phase, layering the groundwork for the world’s most modern CSD.

The new system, distinguished by its cloud-agnostic and microservice-based architecture, plays a key role in B3's ongoing cloud transformation. Henrik Olsson, project manager at Vermiculus, expressed his enthusiasm: "Our IT project is off to a flying start, having just completed the first phase of our journey. With the important groundwork now laid, we are excited to move forward into production as well as the next stages of development."

Henrik Olsson, Project Manager at Vermiculus

This project employs Agile methodology, ensuring flexibility and continuous improvements prioritized by B3 throughout its development. The commitment to quality assurance is evident from the project's outset, with extensive testing integral to each development phase. This meticulous approach ensures the new platform not only meets current demands but is also robust enough to accommodate future growth. The quality focus is evident both when looking at the hard metrics as well as Vermiculus processes. Every piece of new functionality must pass a four-eye check and the full set of regression tests, covering well over 90% of the code base. Prior to a new release, the entire Vermiculus team focuses on quality assurance including full-scale performance tests.

The Need for Innovation

Currently, B3 relies on a legacy CSD system that, while stable, is not equipped to meet future demands. B3 therefore has been looking to upgrade to modern technology to:

  • Stay competitive: To stay the first choice in an increasingly competitive market.
  • Enable to add new asset types as well as products and services for its market participants on-top.
  • Reduce operating and maintenance costs.
  • Handle future substantial volume growth as e.g., equity investments become more popular in Brazil.
  • Be able to run the system 24/7 to support around-the-the clock service

Given these constraints, the development of the new CSD system is crucial. The existing system's critical nature means it cannot afford any downtime . Therefore, the transition to the new system will occur incrementally, with microservices being introduced and launched gradually. The next milestone is the phased launch of microservices, set to begin later in 2024. This approach will ensure a seamless transition, minimizing risks associated with replacing a critical system.

"To ensure a stable transition, the new system will initially run in parallel with the current system with frequent reconciliations, ensuring we successfully handle all the possible edge-cases" explains Henrik Olsson. "With our modern architecture, we can already from start provide new services to the market - an example being new and much more frequent reports to custodians, registrars and issuers. With this approach, we can combine both a stable roll out of this critical system, as well as providing significant value to the market from the very beginning."

Key features of the new CSD system include:

  • Scalability: Designed to handle volume growth for the Brazilian market, the new system is well-positioned for a ten-fold increase in capacity.
  • Advanced Functionality: It will offer new, valuable functionalities that enhance market operations.
  • Remarkably short time-to-market for new products in B3’s CSD business line
  • Frequent data: The platform already enables market participant to access new and more frequent data about investors and holding.

The Road Ahead

Henrik Olsson adds, "As we progress with the phased launch of microservices, we are confident that our approach will minimize risks and ensure a smooth transition. By adopting a phased approach and adding functionality incrementally, we can avoid the high-risk of a big-bang replacement. Our goal is to create a CSD system that not only meets current demands but is also future proof.

Henrik Olsson continues: "Building this type of critical infrastructure requires not only world-leading technology but also a best-in-class project methodology. To deliver such a project successfully, we need to maintain great transparency with our customers, focusing together with them to deliver the right solutions at the right time."

With a firm foundation and a clear roadmap, B3 together with Vermiculus is poised to lead the market with a robust and innovative CSD system that promises enhanced functionality, scalability, and efficiency. The future looks bright as B3 continues to pioneer advancements in the financial sector.